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  • 10-Q Filing

Vishay Precision (VPG) 10-Q2021 Q2 Quarterly report

Filed: 10 Aug 21, 11:29am
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    • 10-Q Quarterly report
    • 31.1 Management certification of annual or quarterly disclosure
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    • 10 Aug 21 VPG Reports Fiscal 2021 Second Quarter Results
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    10 Aug 21
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    UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
    Washington, D.C. 20549
    FORM 10-Q
    (Mark One)
    ☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the quarterly period ended         July 3, 2021
    ☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from _____ to _____
    Commission File Number 1-34679
    VISHAY PRECISION GROUP, INC.
    (Exact name of registrant as specified in its charter)
    Delaware27-0986328
    (State or Other Jurisdiction of Incorporation)(I.R.S. Employer Identification Number)
    3 Great Valley Parkway, Suite 150
    Malvern, PA, 19355
    484-321-5300
    (Address of Principal Executive Offices) (Zip Code)(Registrant’s Telephone Number, including area code)
    Securities registered pursuant to Section 12(b) of the Act:
    Title of each classTrading Symbol(s)Name of each exchange on which registered
    Common stock, $0.10 par valueVPGNew York Stock Exchange
    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes ¨ No
    Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files. ý Yes ¨ No
    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
    Large accelerated filer¨Accelerated filerý
    Non-accelerated filer¨Smaller reporting company☐
    Emerging growth company☐
    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ý No
    As of August 10, 2021, the registrant had 12,602,755 shares of its common stock and 1,022,887 shares of its Class B convertible common stock outstanding.


    VISHAY PRECISION GROUP, INC.
    FORM 10-Q
    July 3, 2021
    CONTENTS
    Page Number
    PART I.
    FINANCIAL INFORMATION
    Item 1.
    Financial Statements
     
    Consolidated Condensed Balance Sheets
    – July 3, 2021 (Unaudited) and December 31, 2020
    3
     
    Consolidated Condensed Statements of Operations
    (Unaudited) – Fiscal Quarters Ended July 3, 2021 and June 27, 2020
    5
     
    Consolidated Condensed Statements of Operations
    (Unaudited) – Six Fiscal Months Ended July 3, 2021 and June 27, 2020
    6
     
    Consolidated Condensed Statements of Comprehensive Income (Loss)
    (Unaudited) – Fiscal Quarters Ended July 3, 2021 and June 27, 2020
    7
     
    Consolidated Condensed Statements of Comprehensive Income (Loss)
    (Unaudited) – Six Fiscal Months Ended July 3, 2021 and June 27, 2020
    8
     
    Consolidated Condensed Statements of Cash Flows
    (Unaudited) –Six Fiscal Months Ended July 3, 2021 and June 27, 2020
    9
     
    Consolidated Condensed Statements of Equity
    (Unaudited) – Fiscal Quarters Ended July 3, 2021 and June 27, 2020
    10
    Consolidated Condensed Statements of Equity
    (Unaudited) – Six Fiscal Months Ended July 3, 2021 and June 27, 2020
    11
    Notes to Unaudited Consolidated Condensed Financial Statements
    12
     
    Item 2.
    Management’s Discussion and Analysis of Financial Condition and Results of Operations
    25
     
    Item 3.
    Quantitative and Qualitative Disclosures About Market Risk
    42
     
    Item 4.
    Controls and Procedures
    42
     
    PART II.
    OTHER INFORMATION
     
    Item 1.
    Legal Proceedings
    43
     
    Item 1A.
    Risk Factors
    43
     
    Item 2.
    Unregistered Sales of Equity Securities and Use of Proceeds
    43
     
    Item 3.
    Defaults Upon Senior Securities
    43
     
    Item 4.
    Mine Safety Disclosures
    43
     
    Item 5.
    Other Information
    43
     
    Item 6.
    Exhibits
    44
     
    SIGNATURES
    45
    -2-


    PART I - FINANCIAL INFORMATION
    Item 1. FINANCIAL STATEMENTS
    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Balance Sheets
    (In thousands)
    July 3, 2021December 31, 2020
    (Unaudited)
    Assets
    Current assets:
    Cash and cash equivalents$73,456 $98,438 
    Accounts receivable, net51,818 45,339 
    Inventories:
    Raw materials25,858 21,894 
    Work in process27,560 21,534 
    Finished goods24,060 18,920 
    Inventories, net77,478 62,348 
    Prepaid expenses and other current assets15,698 15,761 
    Total current assets218,450 221,886 
    Property and equipment:
    Land4,269 4,282 
    Buildings and improvements68,118 67,581 
    Machinery and equipment118,543 115,717 
    Software9,431 10,026 
    Construction in progress3,807 6,341 
    Accumulated depreciation(127,611)(128,931)
    Property and equipment, net76,557 75,016 
    Goodwill45,732 31,105 
    Intangible assets, net54,474 32,039 
    Operating lease right-of-use assets25,451 21,788 
    Other assets19,633 20,053 
    Total assets$440,297 $401,887 
    Continues on the following page.
    -3-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Balance Sheets
    (In thousands)
    July 3, 2021December 31, 2020
    Liabilities and equity
    Current liabilities:
    Trade accounts payable$11,061 $10,487 
    Payroll and related expenses16,818 17,595 
    Other accrued expenses18,138 13,843 
    Income taxes969 1,593 
    Current portion of operating lease liabilities4,445 4,011 
    Current portion of long-term debt0 18 
    Total current liabilities51,431 47,547 
    Long-term debt, less current portion60,670 40,626 
    Deferred income taxes8,345 3,403 
    Operating lease liabilities22,346 19,504 
    Other liabilities15,747 16,263 
    Accrued pension and other postretirement costs15,840 16,687 
    Total liabilities174,379 144,030 
    Commitments and contingencies00
    Equity:
    Common stock1,322 1,317 
    Class B convertible common stock103 103 
    Treasury stock(8,765)(8,765)
    Capital in excess of par value197,856 197,764 
    Retained earnings108,956 100,075 
    Accumulated other comprehensive loss(33,546)(32,671)
    Total Vishay Precision Group, Inc. stockholders' equity265,926 257,823 
    Noncontrolling interests(8)34 
    Total equity265,918 257,857 
    Total liabilities and equity$440,297 $401,887 
    See accompanying notes.
    -4-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Operations
    (Unaudited - In thousands, except per share amounts)
    Fiscal quarter ended
    July 3, 2021June 27, 2020
    Net revenues$75,339 $59,146 
    Costs of products sold45,541 36,036 
    Gross profit29,798 23,110 
    Selling, general, and administrative expenses22,453 18,640 
    Acquisition costs1,198 0 
    Impairment of goodwill and indefinite-lived intangibles1,223 0 
    Restructuring costs0 499 
    Operating income4,924 3,971 
    Other income (expense):
    Interest expense(273)(267)
    Other(326)(1,273)
    Other income (expense)(599)(1,540)
    Income before taxes4,325 2,431 
    Income tax expense262 684 
    Net earnings4,063 1,747 
    Less: net earnings (loss) attributable to noncontrolling interests143 (12)
    Net earnings attributable to VPG stockholders$3,920 $1,759 
    Basic earnings per share attributable to VPG stockholders$0.29 $0.13 
    Diluted earnings per share attributable to VPG stockholders$0.29 $0.13 
    Weighted average shares outstanding - basic13,618 13,571 
    Weighted average shares outstanding - diluted13,646 13,609 















    See accompanying notes.
    -5-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Operations
    (Unaudited - In thousands, except per share amounts)
    Six fiscal months ended
    July 3, 2021June 27, 2020
    Net revenues$145,928 $126,842 
    Costs of products sold87,508 78,667 
    Gross profit58,420 48,175 
    Selling, general, and administrative expenses44,636 38,931 
    Acquisition costs1,198 0 
    Impairment of goodwill and indefinite-lived intangibles1,223 0 
    Restructuring costs0 629 
    Operating income11,363 8,615 
    Other income (expense):
    Interest expense(578)(728)
    Other247 (590)
    Other income (expense)(331)(1,318)
    Income before taxes11,032 7,297 
    Income tax expense2,026 2,258 
    Net earnings9,006 5,039 
    Less: net earnings (loss) attributable to noncontrolling interests125 (32)
    Net earnings attributable to VPG stockholders$8,881 $5,071 
    Basic earnings per share attributable to VPG stockholders$0.65 $0.37 
    Diluted earnings per share attributable to VPG stockholders$0.65 $0.37 
    Weighted average shares outstanding - basic13,605 13,556 
    Weighted average shares outstanding - diluted13,638 13,598 
    See accompanying notes.
    -6-



    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Comprehensive Income (Loss)
    (Unaudited - In thousands)
    Fiscal quarter ended
    July 3, 2021June 27, 2020
    Net earnings$4,063 $1,747 
    Other comprehensive income (loss):
    Foreign currency translation adjustment607 3,271 
    Pension and other postretirement actuarial items, net of tax109 (152)
    Other comprehensive income716 3,119 
    Comprehensive income4,779 4,866 
    Less: comprehensive income (loss) attributable to noncontrolling interests143 (12)
    Comprehensive income attributable to VPG stockholders$4,636 $4,878 


































    See accompanying notes.
    -7-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Comprehensive Income (Loss)
    (Unaudited - In thousands)
    Six fiscal months ended
    July 3, 2021June 27, 2020
    Net earnings$9,006 $5,039 
    Other comprehensive income (loss):
    Foreign currency translation adjustment(1,193)(2,070)
    Pension and other postretirement actuarial items, net of tax318 (311)
    Other comprehensive loss(875)(2,381)
    Comprehensive income8,131 2,658 
    Less: comprehensive income (loss) attributable to noncontrolling interests125 (32)
    Comprehensive income attributable to VPG stockholders$8,006 $2,690 
    See accompanying notes.
    -8-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Cash Flows
    (Unaudited - In thousands)
    Six fiscal months ended
    July 3, 2021June 27, 2020
    Operating activities
    Net earnings$9,006 $5,039 
    Adjustments to reconcile net earnings to net cash provided by operating activities:
    Impairment of goodwill and indefinite-lived intangibles1,223 0 
    Depreciation and amortization7,108 6,312 
    Loss from extinguishment of debt— 30 
    Loss (gain) on sale of property and equipment44 (143)
    Share-based compensation expense942 757 
    Inventory write-offs for obsolescence1,135 1,302 
    Deferred income taxes(1,110)(146)
    Other(1,820)25 
    Net changes in operating assets and liabilities:
    Accounts receivable, net(776)2,077 
    Inventories, net(7,744)(1,383)
    Prepaid expenses and other current assets314 (632)
    Trade accounts payable1,715 1,228 
    Other current liabilities2,341 2,229 
    Net cash provided by operating activities12,378 16,695 
    Investing activities
    Capital expenditures(8,309)(11,018)
    Proceeds from sale of property and equipment16 378 
    Purchase of business, net of cash acquired(47,216)156 
    Net cash used in investing activities(55,509)(10,484)
    Financing activities
    Principal payments on long-term debt(18)(3,418)
    Proceeds from revolving facility20,000 0 
    Debt issuance costs0 (402)
    Purchase of noncontrolling interest0 (253)
    (Distributions to) contributions from noncontrolling interests(167)117 
    Payments of employee taxes on certain share-based arrangements(846)(813)
    Net cash provided by (used in) financing activities18,969 (4,769)
    Effect of exchange rate changes on cash and cash equivalents(820)(1,155)
    (Decrease) increase in cash and cash equivalents(24,982)287 
    Cash and cash equivalents at beginning of period98,438 86,910 
    Cash and cash equivalents at end of period$73,456 $87,197 
    Supplemental disclosure of investing transactions:
    Capital expenditures purchased$(6,353)$(10,290)
    Capital expenditures accrued but not yet paid$606 $455 
    See accompanying notes.
    -9-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Equity
    (Unaudited - In thousands, except share amounts)
    Fiscal quarter ended 
     
    July 3, 2021
    Common
    Stock
    Class B
    Convertible
    Common Stock
    Treasury StockCapital in
    Excess of
    Par Value
    Retained
    Earnings
    Accumulated
    Other
    Comprehensive
    Income (Loss)
    Total VPG Inc.
    Stockholders'
    Equity
    Noncontrolling
    Interests
    Total
    Equity
    Balance at April 3, 2021$1,320 $103 $(8,765)$197,282 $105,036 $(34,262)$260,714 $(95)$260,619 
    Net earnings— — — — 3,920 — 3,920 143 4,063 
    Other comprehensive income— — — — — 716 716 — 716 
    Share-based compensation expense— — — 576 — — 576 — 576 
    Restricted stock issuances ( 15,564 shares)2 — — (2)— — 0 — 0 
    Distributions to noncontrolling interests— — — — — — — (56)(56)
    Balance at July 3, 2021$1,322 $103 $(8,765)$197,856 $108,956 $(33,546)$265,926 $(8)$265,918 
    Fiscal quarter ended 
     
    June 27, 2020
    Common
    Stock
    Class B
    Convertible
    Common Stock
    Treasury StockCapital in
    Excess of
    Par Value
    Retained
    Earnings
    Accumulated
    Other
    Comprehensive
    Income (Loss)
    Total VPG Inc.
    Stockholders'
    Equity
    Noncontrolling
    Interests
    Total
    Equity
    Balance at March 28, 2020$1,316 $103 $(8,765)$196,709 $92,600 $(43,203)$238,760 $347 $239,107 
    Net earnings— — — — 1,759 — 1,759 (12)1,747 
    Other comprehensive loss— — — — — 3,119 3,119 — 3,119 
    Share-based compensation expense— — — 378 — — 378 — 378 
    Restricted stock issuances (8,244 shares)1 — — (1)— — 0 — 0 
    Purchase of noncontrolling interest— — — 48 — — 48 (301)(253)
    Contribution from noncontrolling interests— — — — — — — 142 142 
    Balance at June 27, 2020$1,317 $103 $(8,765)$197,134 $94,359 $(40,084)$244,064 $176 $244,240 
    See accompanying notes.
    -10-


    VISHAY PRECISION GROUP, INC.
    Consolidated Condensed Statements of Equity
    (Unaudited - In thousands, except share amounts)
    Six Fiscal Months Ended July 3, 2021
    Common
    Stock
    Class B
    Convertible
    Common Stock
    Treasury StockCapital in
    Excess of
    Par Value
    Retained
    Earnings
    Accumulated
    Other
    Comprehensive
    Income (Loss)
    Total VPG, Inc.
    Stockholders'
    Equity
    Noncontrolling
    Interests
    Total
    Equity
    Balance at December 31, 2020$1,317 $103 $(8,765)$197,764 $100,075 $(32,671)$257,823 $34 $257,857 
    Net earnings— — — — 8,881 — 8,881 125 9,006 
    Other comprehensive loss— — — — — (875)(875)— (875)
    Share-based compensation expense— — — 942 — — 942 — 942 
    Restricted stock issuances (50,316 shares)5 — — (850)— — (845)— (845)
    Distributions to noncontrolling interests— — — — — — — (167)(167)
    Balance at July 3, 2021$1,322 $103 $(8,765)$197,856 $108,956 $(33,546)$265,926 $(8)$265,918 
    Six Fiscal Months Ended June 27, 2020
    Common
    Stock
    Class B
    Convertible
    Common Stock
    Treasury StockCapital in
    Excess of
    Par Value
    Retained
    Earnings
    Accumulated
    Other
    Comprehensive
    Income (Loss)
    Total VPG, Inc.
    Stockholders'
    Equity
    Noncontrolling
    Interests
    Total
    Equity
    Balance at December 31, 2019$1,312 $103 $(8,765)$197,125 $89,288 $(37,703)$241,360 $392 $241,752 
    Net earnings— — — — 5,071 — 5,071 (32)5,039 
    Other comprehensive loss— — — — — (2,381)(2,381)— (2,381)
    Share-based compensation expense— — — 757 — — 757 — 757 
    Restricted stock issuances (52,433 shares)5 — — (796)— — (791)— (791)
    Purchase of noncontrolling interest— — — 48 — — 48 (301)(253)
    Contributions from noncontrolling interests— — — — — — — 117 117 
    Balance at June 27, 2020$1,317 $103 $(8,765)$197,134 $94,359 $(40,084)$244,064 $176 $244,240 
    See accompanying notes.
    -11-


    Vishay Precision Group, Inc.
    Notes to Unaudited Consolidated Condensed Financial Statements
    Note 1 – Basis of Presentation
    Background
    Vishay Precision Group, Inc. (“VPG” or the “Company”) is an internationally recognized designer, manufacturer and marketer of sensors, and sensor-based measurement systems, as well as specialty resistors and strain gages based upon the Company's proprietary technology. The Company provides precision products and solutions, many of which are “designed-in” by its customers, specializing in the growing markets of stress, force, weight, pressure, and current measurements.
    Interim Financial Statements
    These unaudited consolidated condensed financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial statements and therefore do not include all information and footnotes necessary for the presentation of financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States for complete financial statements. The information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair summary of the financial position, results of operations, and cash flows for the interim periods presented. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of December 31, 2020 and 2019 and for each of the three years in the period ended December 31, 2020, included in VPG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 11, 2021. The results of operations for the fiscal quarter ended July 3, 2021 are not necessarily indicative of the results to be expected for the full year. VPG reports interim financial information for 13-week periods beginning on a Sunday and ending on a Saturday, except for the first quarter, which always begins on January 1, and the fourth quarter, which always ends on December 31. The four fiscal quarters in 2021 and 2020 end on the following dates: 
    20212020
    Quarter 1April 3,March 28,
    Quarter 2July 3,June 27,
    Quarter 3October 2,September 26,
    Quarter 4December 31,December 31,
    Recently Adopted Accounting Pronouncements
    In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update No. ASU 2019-12, "Simplifying the Accounting for Income Taxes". This ASU amends Accounting Standards Codification ("ASC") 740 by removing certain exceptions to the general principles, clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020. The Company adopted this standard in the first quarter of 2021. The adoption of this ASU did not impact our financial statements or the related disclosures.

    Note 2 – Revenues
    Revenue Recognition

    The following table disaggregates net revenue by geographic region from contracts with customers based on net revenues generated by subsidiaries within that geographic location (in thousands):
    -12-

    Note 2 – Revenues (continued)

    Fiscal quarter ended 
     
    July 3, 2021
    Fiscal quarter ended 
     
    June 27, 2020
    Foil Technology
    Products
    Force
    Sensors
    Weighing and
    Control Systems
    TotalFoil Technology
    Products
    Force
    Sensors
    Weighing and
    Control Systems
    Total
    United States$11,003 $8,017 $10,574 $29,594 $10,789 $4,113 $6,009 $20,911 
    United Kingdom1,102 514 3,681 5,297 587 1,711 1,723 4,021 
    Other Europe6,604 5,018 5,204 16,826 6,973 1,434 3,430 11,837 
    Israel5,284 261 0 5,545 5,691 93 0 5,784 
    Asia9,315 3,406 2,012 14,733 7,745 1,565 1,859 11,169 
    Canada0 0 3,344 3,344 0 0 5,424 5,424 
    Total$33,308 $17,216 $24,815 $75,339 $31,785 $8,916 $18,445 $59,146 
    Six Fiscal Months Ended July 3, 2021Six Fiscal Months Ended June 27, 2020
    Foil Technology
    Products
    Force
    Sensors
    Weighing and
    Control Systems
    TotalFoil Technology
    Products
    Force
    Sensors
    Weighing and
    Control Systems
    Total
    United States$21,482 $15,788 $18,241 $55,511 $22,723 $12,505 $14,898 $50,126 
    United Kingdom2,000 1,081 7,694 10,775 1,537 3,691 5,435 10,663 
    Other Europe13,870 10,493 9,765 34,128 14,686 3,808 7,174 25,668 
    Israel11,725 391 0 12,116 8,646 190 0 8,836 
    Asia16,942 6,396 3,613 26,951 14,670 3,417 3,530 21,617 
    Canada0 0 6,447 6,447 0 0 9,932 9,932 
    Total$66,019 $34,149 $45,760 $145,928 $62,262 $23,611 $40,969 $126,842 

    The following table disaggregates net revenue from contracts with customers by market sector (in thousands).
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Test & Measurement$16,279 $14,027 $30,695 $28,372 
    Avionics, Military & Space5,872 6,727 11,902 12,887 
    Transportation11,930 5,188 21,484 13,432 
    Other Markets17,489 12,192 35,034 25,320 
    Industrial Weighing12,042 8,583 24,047 21,050 
    General Industrial4,173 3,623 8,255 7,662 
    Steel7,554 8,806 14,511 18,119 
    Total$75,339 $59,146 $145,928 $126,842 

    Contract Assets & Liabilities

    Contract assets are established when revenues are recognized prior to a contractual payment due from the customer. When a payment becomes due based on the contract terms, the Company will reduce the contract asset and record a receivable. Contract liabilities are deferred revenues that are recorded when cash payments are received or due in advance of our performance obligations. Our payment terms vary by the type and location of the products offered. The term between invoicing and when payment is due is not significant.

    The outstanding contract assets and liability accounts were as follows (in thousands):
    -13-

    Note 2 – Revenues (continued)

    Contract AssetContract Liability
    Unbilled RevenueAccrued Customer Advances
    Balance at December 31, 2020$3,605 $2,873 
    Balance at July 3, 20214,656 4,525 
    (Decrease)/increase$1,051 $1,652 
    The amount of revenue recognized during the six fiscal months ended July 3, 2021 that was included in the contract liability balance at December 31, 2020 was $2.4 million.

    Practical Expedients

    The Company does not disclose the value of unsatisfied performance obligations for contracts that have a duration of one year or less and for contracts that are substantially complete. The Company treats shipping and handling activities as fulfillment costs.

    Note 3 - Acquisition
    On June 1, 2021, VPG completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing, for a purchase price of $47.2 million, subject to customary adjustments. The Company used cash on hand and borrowings under its revolving credit facility to fund the purchase price under the purchase agreement. DTS reports into the Company's Weighing and Control Systems segment. The following table summarizes the provisional fair values assigned to the assets and liabilities of DTS as of June 1, 2021 (in thousands):

    June 1, 2021
    Working capital$12,999 
    Property and equipment1,209 
    Deferred income tax liability(6,274)
    Intangible assets:
    Acquired technology13,167 
    Customer relationships8,135 
    Trade names2,393 
    Total intangible assets23,695 
    Fair value of acquired identifiable assets31,629 
    Purchase price$47,216 
    Goodwill$15,587 

    The Company utilizes certain valuations and studies to determine the fair value of the tangible and intangible assets acquired. These valuations and studies are currently being analyzed and have yet to be finalized. Accordingly, the assets and liabilities assumed are subject to adjustment once the detailed analysis is completed. The provisional estimated weighted average useful lives for the acquired technology and customer relationships are 15 years. Trade names are treated as indefinite-lived intangible assets. None of the goodwill associated with DTS will be deductible for income tax purposes.

    The Company recorded acquisition costs associated with this transaction as follows (in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021July 3, 2021
    Legal fees$341 $341 
    Appraisal fees18 18 
    Other (investment banker and insurance costs)839 839 
    $1,198 $1,198 
    -14-

    Note 3 - Acquisition (continued)
    Included in the results of the operations of the Company, starting on June 1, 2021, are net revenues of $3.0 million and a net loss of $0.2 million from DTS for the fiscal quarter and six fiscal months ended July 3, 2021. DTS results include amortization of the inventory step-up of $0.9 million and amortization of intangible assets of $0.1 million.
    Following is the supplemental consolidated financial results for the Company on an unaudited pro forma basis, as if the DTS acquisition had been consummated on January 1, 2020:

    Fiscal quarter endedSix fiscal months endedFiscal quarter endedSix fiscal months ended
    June 27, 2020June 27, 2020July 3, 2021July 3, 2021
    Pro forma net revenues$64,907 $139,158 80,243 159,164 
    Pro forma net earnings attributable to VPG stockholders$1,629 $3,658 6,741 13,411 
    Pro forma basic earnings per share attributable to VPG stockholders$0.12 $0.27 $0.50 $0.99 
    Pro forma diluted earnings per share attributable to VPG stockholders$0.12 $0.27 $0.49 $0.98 

    Note 4 – Goodwill and Other Intangible Assets
    The Company tests the goodwill in each of its goodwill reporting units for impairment at least annually, as of the first day of it's fourth quarter, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred. Due to updated financial projections, the Company performed a quantitative impairment test for the instrumentation reporting unit during the second quarter of 2021. In estimating the fair value of our instrumentation reporting unit the Company used the income approach.

    The results of the quantitative impairment test for the instrumentation reporting unit's goodwill and indefinite-lived trade name indicated an impairment, and in the second quarter of 2021, the Company recognized a non-cash impairment loss of $1.1 million in goodwill and $0.1 million to the indefinite-lived trade name. The impairment was driven mainly by changes in forecasted projections including a slower growth rate in revenues. After considering the impact of the impairment charges, the carrying amount of goodwill and indefinite-lived trade names as of July 3, 2021 was $0.0 million and $0.3 million, respectively.
    The change in the carrying amount of goodwill by segment is as follows (in thousands):
    TotalWeighing and Control Systems SegmentFoil Technology Products Segment
    KELK AcquisitionDSI AcquisitionDTS AcquisitionStress-Tek AcquisitionPacific Acquisition
    Balance at December 31, 2020$31,105 $6,726 $16,942 $6,311 $1,126 
    Goodwill acquired15,587 15,587 
    Impairment charges(1,126)(1,126)
    Foreign currency translation adjustment166 180 (14)— — 
    Balance at July 3, 2021$45,732 $6,906 $16,928 $15,587 $6,311 $0 





    -15-

    Note 4 – Goodwill and Other Intangible Assets (continued)


    Intangible assets were as follows (in thousands):
    July 3, 2021December 31, 2020
    Intangible assets subject to amortization
    (Definite-lived):
    Patents and acquired technology$33,069 $19,804 
    Customer relationships34,393 26,061 
    Trade names1,697 1,747 
    Non-competition agreements11,646 12,259 
    80,805 59,871 
    Accumulated amortization:
    Patents and acquired technology(6,552)(5,895)
    Customer relationships(14,191)(13,363)
    Trade names(1,697)(1,747)
    Non-competition agreements(11,639)(12,250)
    (34,079)(33,255)
    Net intangible assets subject to amortization$46,726 $26,616 
    Intangible assets not subject to amortization
    (Indefinite-lived):
    Trade names7,748 5,423 
    $54,474 $32,039 
    The increase in net intangible assets from December 31, 2020 is due to the acquisition of DTS on June 1, 2021. The Company has preliminarily allocated $21.3 million of the purchase price to definite-lived intangible assets and $2.4 million to indefinite-lived intangible assets.
    Amortization expense for the fiscal quarter and six fiscal months ended July 3, 2021 was $0.7 million and $1.4 million, respectively. The DTS intangible assets accounted for $0.1 million of amortization expense for the fiscal quarter and six fiscal months ended July 3, 2021.
    Estimated annual amortization expense for the full year of 2021 and each of the next four years, is as follows ( in thousands):
    2021$3,280 
    20223,871 
    20233,763 
    20243,728 
    20253,728 


    Note 5 – Leases
    The Company primarily leases office and manufacturing facilities in addition to vehicles, which have remaining terms of less than one year to eleven years. The Company has no finance leases.
    Leases recorded on the balance sheet consist of the following (in thousands):
    -16-

    Note 5 - Leases (continued)

    LeasesJuly 3, 2021December 31, 2020
     Assets
     Operating lease right of use asset$25,451 $21,788 
     Liabilities
     Operating lease - current$4,445 $4,011 
     Operating lease - non-current$22,346 $19,504 
    Other information related to lease term and discount rate is as follows:
    July 3, 2021
     Operating leases weighted average remaining lease term (in years)8.49 years
     Operating leases weighted average discount rate3.36 %

    The components of lease expense are as follows (in thousands):
    Fiscal quarter endedSix Fiscal Months Ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
     Operating lease cost$1,258 $1,139 $2,439 $2,013 
     Short-term lease cost35 34 68 57 
    Sublease income(19)0 (28)0 
     Total net lease cost$1,274 $1,173 $2,479 $2,070 
    Right of use assets obtained in exchange for new operating lease liability during 2021 were $5.9 million. The Company paid $2.4 million and $1.7 million for its operating leases for each of the six fiscal months ended July 3, 2021 and June 27, 2020, which are included in operating cash flows on the consolidated condensed statements of cash flows.

    Undiscounted maturities of operating lease payments as of July 3, 2021 are summarized as follows (in thousands):
    2021 (excluding the six months ended July 3, 2021)$2,596 
    20224,500 
    20233,968 
    20243,555 
    20253,083 
    Thereafter12,894 
     Total future minimum lease payments$30,596 
     Less: amount representing interest(3,805)
     Present value of future minimum lease payments$26,791 
    Note 6 – Income Taxes
    VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate for the fiscal quarter ended July 3, 2021 was 6.1% compared to 28.1% for the fiscal quarter ended June 27, 2020, and the effective tax rate for the six fiscal months ended July 3, 2021 was 18.4% compared to 30.9% for the six fiscal months ended June 27, 2020. The tax rate for both periods presented in 2021 is lower than the prior year periods primarily due to the acquisition of DTS, which enabled the Company to reduce its valuation allowance against deferred tax assets, tax rate changes in certain foreign jurisdictions, and changes in the mix of worldwide income.
    The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they
    -17-

    Note 6 - Income Taxes (continued)
    may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.
    Note 7 – Long-Term Debt
    Long-term debt consists of the following (in thousands):
    July 3, 2021December 31, 2020
    2020 Credit Agreement - Revolving Facility$61,000 $41,000 
    Other debt0 18 
    Deferred financing costs(330)(374)
    Total long-term debt60,670 40,644 
    Less: current portion0 18 
    Long-term debt, less current portion$60,670 $40,626 

    Note 8 – Accumulated Other Comprehensive Income (Loss)
    The components of accumulated other comprehensive income (loss), net of tax, consist of the following (in thousands):
    Foreign Currency Translation AdjustmentPension
    and Other
    Postretirement
    Actuarial Items
    Total
    Balance at January 1, 2021$(25,591)$(7,080)$(32,671)
    Other comprehensive loss before reclassifications(1,193)0 (1,193)
    Amounts reclassified from accumulated other comprehensive income (loss)0 318 318 
    Balance at July 3, 2021$(26,784)$(6,762)$(33,546)
    Foreign Currency Translation AdjustmentPension
    and Other
    Postretirement
    Actuarial Items
    Total
    Balance at January 1, 2020$(30,761)$(6,942)$(37,703)
    Other comprehensive loss before reclassifications(2,070)0 (2,070)
    Amounts reclassified from accumulated other comprehensive income (loss)0 (311)(311)
    Balance at June 27, 2020$(32,831)$(7,253)$(40,084)
    Reclassifications of pension and other postretirement actuarial items out of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost (see Note 9).
    Note 9 – Pension and Other Postretirement Benefits
    Employees of VPG participate in various defined benefit pension and other postretirement benefit ("OPEB") plans. The following table sets forth the components of the net periodic benefit cost for the Company's defined benefit pension and OPEB plans (in thousands):
    -18-

    Note 9 - Pension and Other Postretirement Benefits ( continued)
    Fiscal quarter ended 
     
    July 3, 2021
    Fiscal quarter ended 
     
    June 27, 2020
    Pension
    Plans
    OPEB
    Plans
    Pension
    Plans
    OPEB
    Plans
    Net service cost$96 $9 $99 $31 
    Interest cost103 17 127 33 
    Expected return on plan assets(97)0 (109)0 
    Amortization of actuarial losses102 5 76 34 
    Net periodic benefit cost$204 $31 $193 $98 

    Six fiscal months ended July 3, 2021Six fiscal months ended June 27, 2020
    Pension
    Plans
    OPEB
    Plans
    Pension
    Plans
    OPEB
    Plans
    Net service cost$193 $18 $198 $62 
    Interest cost206 34 256 66 
    Expected return on plan assets(194)0 (220)0 
    Amortization of actuarial losses204 10 153 68 
    Net periodic benefit cost$409 $62 $387 $196 
    Note 10 – Share-Based Compensation
    The Amended and Restated Vishay Precision Group, Inc. 2010 Stock Incentive Program (as amended and restated, the “Plan”) permits the issuance of up to 1,000,000 shares of common stock. At July 3, 2021, the Company had reserved 320,654 shares of common stock for future grants of equity awards (restricted stock, unrestricted stock, restricted stock units ("RSUs"), or stock options) pursuant to the Plan. If any outstanding awards are forfeited by the holder or canceled by the Company, the underlying shares would be available for re-grant to others.
    On March 4, 2021 and in accordance with their respective employment agreements, VPG’s 3 executive officers were granted annual equity awards in the form of RSUs, of which 50% are performance-based. The awards have an aggregate target grant-date fair value of $1.7 million and were comprised of 52,486 RSUs. NaN percent of these awards will vest on January 1, 2024, subject to the executives’ continued employment. The performance-based portion of the RSUs will also vest on January 1, 2024, subject to the executives' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative “adjusted free cash flow” and "net earnings goals", each weighted equally.
    On March 8, 2021, certain non-executive VPG employees were granted annual equity awards in the form of RSUs. Certain employees received awards, of which 75% are performance-based and certain employees received awards of which 50% are performance-based. The awards have an aggregate grant-date fair value of $0.6 million and were comprised of 17,793 RSUs. The non-performance portion of these awards (NaN percent for certain employees and 50 percent for certain employees) will vest on January 1, 2024 subject to the employees' continued employment. The performance-based portion of the RSUs will also vest on January 1, 2024, subject to the employees' continued employment and the satisfaction of certain performance objectives relating to three-year cumulative earnings and cash flow goals, each weighted equally.

    On May 27, 2021 and in accordance with the Company's 2017 Non-Employee Director Compensation Plan, the Board of Directors approved the issuance of an aggregate of 9,936 RSUs to the independent board members of the Board of Directors and to the non-executive Chairman of the Board of Directors. The awards have an aggregate grant-date fair value of $0.3 million and will vest on the earlier of the 2022 Annual Stockholders Meeting or May 27, 2022, subject to the directors' continued service on the Board of Directors.

    Vesting of equity awards is subject to acceleration under certain circumstances.
    -19-

    Note 10 - Share-Based Compensation (continued)
    The amount of compensation cost related to share-based payment transactions is measured based on the grant-date fair value of the equity instruments issued. VPG determines compensation cost for RSUs based on the grant-date fair value of the underlying common stock. The Company recognizes compensation cost for RSUs that are expected to vest and for which performance criteria are expected to be met. The following table summarizes share-based compensation expense recognized (in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Restricted stock units$576 $378 $942 $757 
    Note 11 – Segment Information
    VPG reports in 3 product segments: the Foil Technology Products segment, the Force Sensors segment, and the Weighing and Control Systems segment. The Foil Technology Products reporting segment is comprised of the foil resistor and strain gage operating segments. The Force Sensors reporting segment is comprised of transducers, load cells, and modules. The Weighing and Control Systems reporting segment is comprised of complete systems which include load cells and instrumentation for weighing, force control and force measurement for a variety of uses such as process control on-board weighing applications.
    VPG evaluates reporting segment performance based on multiple performance measures including third party net revenues, gross profits and operating income, exclusive of certain items. Management believes that evaluating segment performance, excluding items such as restructuring costs, executive severance costs, and other items is meaningful because it provides insight with respect to the intrinsic operating results of VPG. The following table sets forth reporting segment information (in thousands):
    -20-

    Note 11 - Segment Information (continued)
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Net revenues:
    Foil Technology Products$33,308 $31,785 $66,019 $62,262 
    Force Sensors17,216 8,916 34,149 23,611 
    Weighing and Control Systems24,815 18,445 45,760 40,969 
    Total$75,339 $59,146 $145,928 $126,842 
    Gross profit:
    Foil Technology Products$12,942 $13,286 $25,981 $24,487 
    Force Sensors5,969 1,038 12,008 4,610 
    Weighing and Control Systems10,887 8,786 20,431 19,078 
    Total$29,798 $23,110 $58,420 $48,175 
    Reconciliation of segment operating income to consolidated results:
    Foil Technology Products$7,219 $8,070 $14,052 $13,454 
    Force Sensors3,474 (1,013)6,977 191 
    Weighing and Control Systems4,595 4,019 8,419 8,687 
    Unallocated G&A expenses(7,943)(6,606)(15,664)(13,088)
    Acquisition costs(1,198)0 (1,198)0 
    Impairment of goodwill and indefinite-lived intangibles(1,223)0 (1,223)0 
    Restructuring costs0 (499)0 (629)
    Operating income$4,924 $3,971 $11,363 $8,615 
    Acquisition costs:
    Weighing and Control Systems(1,198)0 (1,198)0 
    $(1,198)$0 $(1,198)$0 
    Impairment of goodwill and indefinite-lived intangibles:
    Foil Technology Products$(1,223)$0 $(1,223)$0 
    $(1,223)$0 $(1,223)$0 
    Restructuring costs:
    Foil Technology Products$0 $(341)$0 $(443)
    Force Sensors$0 $(80)$0 $(108)
    Corporate/Other0 (78)0 (78)
    $0 $(499)$0 $(629)
    Products are transferred between segments on a basis intended to reflect, as nearly as practicable, the market value of the products. The table below summarizes intersegment sales (in thousands):
    -21-

    Note 11 - Segment Information (continued)
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Foil Technology Products to Force Sensors and Weighing and Control Systems$959 $868 $1,920 $1,592 
    Weighing and Control Systems to Foil Technology Products and Force Sensors$150 $124 $264 $211 
    Note 12 – Earnings Per Share
    The following table sets forth the computation of basic and diluted earnings per share attributable to VPG stockholders (in thousands, except earnings per share):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Numerator:
    Numerator for basic earnings per share:
    Net earnings attributable to VPG stockholders$3,920 $1,759 $8,881 $5,071 
    Denominator:
    Denominator for basic earnings per share:
    Weighted average shares13,618 13,571 13,605 13,556 
    Effect of dilutive securities:
    Restricted stock units28 38 33 42 
    Dilutive potential common shares28 38 33 42 
    Denominator for diluted earnings per share:
    Adjusted weighted average shares13,646 13,609 13,638 13,598 
    Basic earnings per share attributable to VPG stockholders$0.29 $0.13 $0.65 $0.37 
    Diluted earnings per share attributable to VPG stockholders$0.29 $0.13 $0.65 $0.37 
    -22-


    Note 13 – Additional Financial Statement Information
    Other Income (Expense) Other
    The caption “Other” on the consolidated condensed statements of operations consists of the following (in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Foreign exchange (loss) gain$(174)$(1,185)$561 $(285)
    Interest income20 109 65 176 
    Pension expense(143)(164)(280)(323)
    Other(29)(33)(99)(158)
    $(326)$(1,273)$247 $(590)

    Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. For the fiscal quarter ended July 3, 2021, the change in foreign exchange gains and losses during the period, as compared to the prior year period, is largely due to exposure to currency fluctuations with the Canadian dollar, Japanese yen, the Israeli shekel and the British pound.
    For the six fiscal months ended July 3, 2021, the change in foreign exchange gains and losses during the period as compared to the prior year period is largely due to exposure to currency fluctuations with the Canadian dollar, the Israeli shekel, the Japanese yen, the euro and the British pound

    Note 14 – Fair Value Measurements
    ASC Topic 820, Fair Value Measurement, establishes a valuation hierarchy of the inputs used to measure fair value. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
    Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
    Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
    Level 3: Unobservable inputs that reflect the Company’s own assumptions.
    An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
    The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis (in thousands):
    Fair value measurements at reporting date using:
    Total
    Fair Value
    Level 1
    Inputs
    Level 2
    Inputs
    Level 3
    Inputs
    July 3, 2021
    Assets
    Assets held in rabbi trusts$5,995 $80 $5,915 $0 
    December 31, 2020
    Assets
    Assets held in rabbi trusts$5,601 $61 $5,540 $0 
    The Company maintains non-qualified trusts, referred to as “rabbi” trusts, to fund payments under deferred compensation and non-qualified pension plans. Rabbi trust assets consist primarily of marketable securities, classified as available-for-sale money market funds at July 3, 2021 and December 31, 2020, and company-owned life insurance assets. The marketable securities held
    -23-

    Note 14 - Fair Value Measurements (continued)
    in the rabbi trusts are valued using quoted market prices on the last business day of the period. The company-owned life insurance assets are valued in consultation with the Company’s insurance brokers using the value of underlying assets of the insurance contracts. The fair value measurement of the marketable securities held in the rabbi trust is considered a Level 1 measurement and the measurement of the company-owned life insurance assets is considered a Level 2 measurement within the fair value hierarchy.
    The fair value of the long-term debt, excluding capitalized deferred financing costs, at July 3, 2021 and December 31, 2020 approximates its carrying value as the revolving debt is reset on a monthly basis based on current market rates, plus a base rate as specified in the debt agreement. The fair value of long-term debt is considered a Level 2 measurement within the fair value hierarchy. The Company’s financial instruments include cash and cash equivalents, accounts receivable, short-term notes payable, and accounts payable. The carrying amounts for these financial instruments reported in the consolidated condensed balance sheets approximate their fair values.
    Note 15 – Restructuring Costs
    Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods or to reverse part of the previously recorded charges.
    The Company recorded $0.0 million and $0.5 million of restructuring costs during the fiscal quarter ended July 3, 2021 and June 27, 2020, respectively and $0.0 million and $0.6 million of restructuring costs during the six fiscal months ended July 3, 2021 and June 27, 2020, respectively. Restructuring costs were comprised primarily of employee terminations costs, including severance and statutory retirement allowances, and were incurred in connections with various cost reduction programs.
    The following table summarizes recent activity related to all restructuring programs. The accrued restructuring liability balance as of July 3, 2021 and December 31, 2020, respectively, is included in Other accrued expenses in the accompanying consolidated condensed balance sheets (in thousands):
    Balance at December 31, 2020$63 
    Cash payments(51)
    Balance at July 3, 2021$12 




    -24-


    Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    Overview
    VPG is an internationally recognized designer, manufacturer and marketer of sensors, and sensor-based measurement systems, as well as specialty resistors and strain gages based upon our proprietary technology. We provide precision products and solutions, many of which are “designed-in” by our customers, specializing in the growing markets of stress, force, weight, pressure, and current measurements. A significant portion of our products and solutions are primarily based upon our proprietary foil technology and are produced as part of our vertically integrated structure. We believe this strategy results in higher quality, more cost effective and focused solutions for our customers. Our products are marketed under a variety of brand names that we believe are characterized as having a very high level of precision and quality. Our global operations enable us to produce a wide variety of products in strategically effective geographic locations that also optimize our resources for specific technologies, sensors, assemblies, and systems.
    The Company also has a long heritage of innovation in precision foil resistors, foil strain gages, and sensors that convert mechanical inputs into an electronic signal for display, processing, interpretation, or control by our instrumentation and systems products. Our advanced sensor product line continues this heritage by offering high-quality foil strain gages produced in a proprietary, highly automated environment. Precision sensors are essential to the accurate measurement, resolution and display of force, weight, pressure, torque, tilt, motion, or acceleration, especially in the legal-for-trade, commercial, and industrial marketplaces. This expertise served as a foundation for our expansion into strain gage instrumentation, load cells, transducers, weighing modules, and complete systems for process control and on-board weighing. Although our products are typically used in the industrial market, our advanced sensors have been used in a consumer electronics product and are being evaluated for other non-industrial applications.
    The precision sensor market is integral to the development of intelligent products across a wide variety of end markets upon which we focus, including medical, agricultural, transportation, industrial, avionics, military, and space applications. We believe that as original equipment manufacturers (“OEMs”) continue a drive to make products “smarter,” they will integrate more sensors and related systems into their solutions to link the mechanical/physical world with digital control and/or response. We believe this offers a substantial growth opportunity for our products and expertise.
    Impact of COVID-19 on Our Business
    As of August 10, 2021, all of the Company’s facilities are open and operational. The Company is continuing to maintain COVID-19 best practices it believes are warranted with respect to working conditions. Nonetheless, given the ongoing uncertainty concerning the magnitude and duration of the COVID-19 pandemic around the world, any ongoing economic disruption may adversely affect the Company’s business and financial results.
    Overview of Financial Results
    VPG reports in three product segments: the Foil Technology Products segment, the Force Sensors segment, and the Weighing and Control Systems segment. The Foil Technology Products reporting segment is comprised of the foil resistor and strain gage operating segments. The Force Sensors reporting segment is comprised of transducers, load cells, and modules. The Weighing and Control Systems reporting segment is comprised of complete systems which include load cells and instrumentation for weighing, force control and force measurement for a variety of uses such as process control on-board weighing applications. On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc. (“DTS”), a manufacturer of data acquisition systems and sensors for product safety and testing. DTS reports into the Company's Weighing and Control Systems segment.
    Net revenues for the fiscal quarter ended July 3, 2021 were $75.3 million versus $59.1 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the fiscal quarter ended July 3, 2021 were $3.9 million, or $0.29 per diluted share, versus $1.8 million, or $0.13 per diluted share, for the comparable prior year period.
    Net revenues for the six fiscal months ended July 3, 2021 were $145.9 million versus $126.8 million for the comparable prior year period. Net earnings attributable to VPG stockholders for the six fiscal months ended July 3, 2021 were $8.9 million, or $0.65 per diluted share, versus $5.1 million, or $0.37 per diluted share, for the comparable prior year period.
    The results of operations for the fiscal quarter ended July 3, 2021 and June 27, 2020 include items affecting comparability as listed in the reconciliations below. The reconciliations below include certain financial measures which are not recognized in accordance with U.S. generally accepted accounting principles ("GAAP"), including adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA and adjusted EBITDA. These non-GAAP measures should not be viewed as an alternative to GAAP measures of
    -25-


    performance. Non-GAAP measures such as adjusted gross profits, adjusted gross profit margin, adjusted operating income, adjusted operating margin, adjusted net earnings, adjusted net earnings per diluted share, EBITDA and adjusted EBITDA do not have uniform definitions. These measures, as calculated by VPG, may not be comparable to similarly titled measures used by other companies. Management believes that these non-GAAP measures are useful to investors because each presents what management views as our core operating performance for the relevant period. The adjustments to the applicable GAAP measures relate to occurrences or events that are outside of our core operations, and management believes that the use of these non-GAAP measures provides a consistent basis to evaluate our operating profitability and performance trends across comparable periods. In addition, the Company has historically provided these or similar non-GAAP measures and understands that some investors and financial analysts find this information helpful in analyzing the Company’s performance and in comparing the Company’s financial performance to that of its peer companies and competitors. Management believes that the Company’s non-GAAP measures are regarded as supplemental to its GAAP financial results. Beginning in the fourth quarter of 2020, the Company determined to include the impact of foreign currency exchange rates on its assets and liabilities in certain of its non-GAAP measures for its current and comparative periods.
    Gross ProfitOperating IncomeNet Earnings Attributable to VPG StockholdersDiluted Earnings Per share
    Three months endedJuly 3, 2021June 27, 2020July 3, 2021June 27, 2020July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    As reported - GAAP$29,798 $23,110 $4,924 $3,971 $3,920 $1,759 $0.29 $0.13 
    As reported - GAAP Margins39.6 %39.1 %6.5 %6.7 %
    Acquisition purchase accounting adjustments (a)919 41 919 41 919 41 0.07 — 
    Acquisition costs (b)— 1,198 — 1,198 — 0.09 — 
    COVID-19 impact (b)(26)558 (242)443 (242)443 (0.02)0.03 
    Start-up costs (c)1,159 — 1,159 — 1,159 — 0.08 — 
    Impairment of goodwill and indefinite-lived intangibles— 1,223 — 1,223 — 0.09 — 
    Restructuring costs— — 499 — 499 — 0.04 
    Foreign exchange (gain)/loss (d)— — 174 1,185 0.01 0.09 
    Less: Tax effect of reconciling items and discrete tax items— — 1,639 340 0.12 0.02 
    As Adjusted - Non GAAP$31,850 $23,709 $9,181 $4,954 $6,712 $3,587 $0.49 $0.27 
    As Adjusted - Non GAAP Margins42.3 %40.1 %12.2 %8.4 %
    -26-


    Gross ProfitOperating IncomeNet Earnings Attributable to VPG StockholdersDiluted Earnings Per share
    Six fiscal months endedJuly 3, 2021June 27, 2020July 3, 2021June 27, 2020July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    As reported - GAAP58,420 48,175 11,363 8,615 $8,881 $5,071 $0.65 $0.37 
    As reported - GAAP Margins40.0 %38.0 %7.8 %6.8 %
    Acquisition purchase accounting adjustments (a)930 556 930 556 930 556 0.07 0.04 
    Acquisition costs (b)— 1,198 — 1,198 — 0.09 — 
    COVID-19 impact (b)(177)558 (685)443 (685)443 (0.05)0.03 
    Start-up costs (c)
    1,288 — 1,288 — 1,288 — 0.09 — 
    Impairment of goodwill and indefinite-lived intangibles— — 1,223 — 1,223 — 0.09 — 
    Restructuring costs— 629 — 629 — 0.05 
    Foreign exchange (gain)/loss (d)
    (561)285 (0.04)0.02 
    Less: Tax effect of reconciling items and discrete tax items1,406 147 0.10 0.01 
    As Adjusted - Non GAAP$60,461 $49,289 $15,317 $10,243 $10,868 $6,837 $0.80 $0.50 
    As Adjusted - Non GAAP Margins41.4 %38.9 %10.5 %8.1 %
    Three months endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Net earnings attributable to VPG stockholders$3,920 $1,759 $8,881 $5,071 
    Interest Expense273 267 578 728 
    Income tax expense262 684 2,026 2,258 
    Depreciation2,829 2,509 5,736 5,080 
    Amortization757 604 1,372 1,232 
    EBITDA8,041 $5,823 18,593 $14,369 
    EBITDA MARGIN10.7 %9.8 %12.7 %11.3 %
    Impairment of goodwill and indefinite-lived intangibles1,223 — 1,223 — 
    Acquisition purchase accounting adjustments (a)919 41 930 556 
    Acquisition costs1,198 — $1,198 $— 
    Restructuring costs— 499 — 629 
    COVID-19 impact (b)(242)443 (685)443 
    Start-up costs (c)1,159 — 1,288 — 
    Foreign exchange (gain)/loss (d)174 1,185 (561)285 
    ADJUSTED EBITDA$12,472 $7,991 $21,986 $16,282 
    ADJUSTED EBITDA MARGIN16.6 %13.5 %15.1 %12.8 %


    (a)     Acquisition purchase accounting adjustments include fair market value adjustments associated with inventory recorded as a component of costs of products sold.
    (b)    COVID-19 impact is the net impact to the Company of costs incurred as a result of the COVID-19 pandemic, net of government subsidies received.
    (c)    Start-up costs in 2021 are associated with the ramp up of our new manufacturing facility in Israel.
    (d)    Impact of foreign currency exchange rates on assets and liabilities. Note that impacts in prior year have been added to this table.

    -27-


    Financial Metrics
    We utilize several financial measures and metrics to evaluate performance and assess the future direction of our business. These key financial measures and metrics include net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover.
    Gross profit margin is computed as gross profit as a percentage of net revenues. Gross profit is generally net revenues less costs of products sold, but could also include certain other period costs. Gross profit margin is a function of net revenues, but also reflects our cost-cutting programs and our ability to contain fixed costs.
    End-of-period backlog is one indicator of potential future sales. We include in our backlog only open orders that have been released by the customer for shipment in the next twelve months. If demand falls below customers’ forecasts, or if customers do not control their inventory effectively, they may cancel or reschedule the shipments that are included in our backlog, in many instances without the payment of any penalty. Therefore, backlog is not necessarily indicative of the results expected for future periods.
    Another important indicator of demand in our industry is the book-to-bill ratio, which is the ratio of the amount of product ordered during a period compared with the amount of product shipped during that period. A book-to-bill ratio that is greater than one indicates that revenues may increase in future periods. Conversely, a book-to-bill ratio that is less than one is an indicator of lower demand and may foretell declining sales. The book-to-bill ratio is also impacted by the timing of orders, particularly from our project-based product lines.
    We focus on inventory turnover as a measure of how well we manage our inventory. We define inventory turnover for a financial reporting period as our costs of products sold for the four fiscal quarters ending on the last day of the reporting period divided by our average inventory (computed using each quarter-end balance) for this same period. A higher level of inventory turnover reflects more efficient use of our capital.
    The quarter-to-quarter trends in these financial metrics can also be an important indicator of the likely direction of our business. The following tables show net revenues, gross profit margin, end-of-period backlog, book-to-bill ratio, and inventory turnover for our business as a whole and by segment during the five quarters beginning with the second quarter of 2020 through the second quarter of 2021 (dollars in thousands):
    2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter
    20202020202020212021
    Net revenues$59,146 $67,525 $75,445 $70,589 $75,339 
    Gross profit margin39.1 %40.5 %38.1 %40.5 %39.6 %
    End-of-period backlog$92,900 $90,800 $87,600 $100,700 $130,900 
    Book-to-bill ratio0.95 0.95 0.93 1.21 1.40 
    Inventory turnover2.20 2.38 2.86 2.67 2.64 
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    2nd Quarter3rd Quarter4th Quarter1st Quarter2nd Quarter
    20202020202020212021
    Foil Technology Products
    Net revenues$31,785 $32,906 $36,477 $32,711 $33,308 
    Gross profit margin41.8 %41.1 %38.4 %39.9 %38.9 %
    End-of-period backlog$47,500 $48,500 $43,700 $48,400 $60,600 
    Book-to-bill ratio0.85 1.01 0.84 1.19 1.37 
    Inventory turnover2.58 2.63 3.05 2.72 2.67 
    Force Sensors
    Net revenues$8,916 $13,862 $16,251 $16,933 $17,216 
    Gross profit margin11.6 %30.5 %29.1 %35.7 %34.7 %
    End-of-period backlog$22,300 $21,300 $24,700 $26,800 $30,700 
    Book-to-bill ratio1.58 0.90 1.18 1.14 1.23 
    Inventory turnover2.02 2.28 2.74 2.72 2.57 
    Weighing and Control Systems
    Net revenues$18,445 $20,757 $22,717 $20,945 $24,815 
    Gross profit margin47.6 %46.2 %44.0 %45.6 %43.9 %
    End-of-period backlog$23,100 $21,000 $19,200 $25,500 $39,600 
    Book-to-bill ratio0.82 0.88 0.88 1.30 1.56 
    Inventory turnover1.81 2.13 2.67 2.54 2.64 
    Net revenues for the second quarter of 2021 increased 6.7% from the first quarter of 2021 mainly due to increased volume in all of the Company's reporting segments. Net revenues increased 27.4% from the second quarter of 2020 with increased volume primarily from the Force Sensors reporting segment and the Weighing and Control Systems segment. The increase in the Weighing and Control Systems reporting segment was aided by the addition of revenues from the acquisition of DTS.
    Net revenues in the Foil Technology Products reporting segment increased 1.8% compared to the first quarter of 2021 and increased 4.8% from the second quarter of 2020. Sequentially, the increase in revenue was primarily driven by higher sales of precision foil resistors in the test and measurements market, partially offset by lower revenue to the Avionics, Military and Space market. In addition, the sequential increase in revenue in our Pacific Instrument product line in the Avionics, Military and Space market was partially offset by lower revenue of advanced sensors in our other markets. The year-over-year increase in revenue was primarily attributable to an increase in our advanced sensors product line, primarily in our general industrial market and an increase in our Pacific Instrument product line in the Avionics, Military and Space market.
    Net revenues in the Force Sensors reporting segment increased 1.7% from the first quarter of 2021 and increased 93.1% from the second quarter of 2020. The sequential increase was primarily due to higher revenue in our Other markets, mainly in consumer and construction. The year-over-year increase primarily reflected operational limitations in the second fiscal quarter of 2020 from the COVID pandemic at our facility in India.
    Net revenues in the Weighing and Control Systems reporting segment increased 18.5% from the first quarter of 2021 and increased 34.5% from the second quarter of 2020. The sequential increase in net revenues was primarily due to the acquisition of DTS and higher revenue of process weighing solutions and KELK products. The year-over-year increase in revenue was primarily attributable to the addition of revenue for DTS, higher revenue of our onboard weighing products for the transportation market, higher revenue of our process weighing solutions for the industrial market, and higher revenue of our Dynamic Systems, Inc. ("DSI") products for the steel market, which was partially offset by lower revenue of KELK steel-related products.
    Overall gross profit margin in the second quarter of 2021 decreased 0.9% as compared to the first quarter of 2021 and increased 0.5% from the second quarter of 2020.
    Sequentially, all reporting segments contributed to the decrease in the gross profit margin. The Foil Technology Products reporting segment gross profit margins decreased sequentially due to the impact of charges related to start-up costs in our new advanced sensors facility and the impact of COVID-19, which were partially offset by manufacturing efficiencies, an increase
    -29-


    in inventory and higher volume. The Force Sensors reporting segment gross profit margin decreased sequentially due to unfavorable foreign exchange rates, partially offset by increases in inventory and volume. In the Weighing and Control Systems reporting segment, the decrease in gross profit margin compared to the prior sequential quarter was due to the impact of charges related to the purchase accounting adjustment from the DTS acquisition and the impact of COVID-19, which were partially offset by the addition of DTS.
    Compared to the second quarter of 2020, the Foil Technology Products reporting segment had a lower gross profit margin. Impacts from charges related to start-up costs in our new advanced sensors facility and the impact of COVID-19 were partially offset by higher volume and favorable product mix. The Force Sensors reporting segment increase in gross profit margin as compared to 2020 was primarily due to higher revenue and an increase in inventory. In the Weighing and Control Systems segment, the decrease in gross profit margin as compared to the second quarter of 2020 was due to the impact of charges related to purchase accounting adjustments from the DTS acquisition and the impact of COVID-19, along with an unfavorable product mix, which were partially offset by the addition of DTS and favorable exchange rates.
    Optimize Core Competence
    The Company’s core competency and key value proposition is providing customers with proprietary foil technology products and precision measurement sensors and sensor-based systems. Our foil technology resistors and strain gages are recognized as global market leading products that provide high precision and high stability over extreme temperature ranges, and long life. Our force sensor products and our weighing and control systems products are also certified to meet some of the highest levels of precision measurements of force, weight, pressure, torque, tilt, motion, and acceleration. We continue to optimize all aspects of our development, manufacturing and sales processes, including by increasing our technical sales efforts; continuing to innovate in product performance and design; and refining our manufacturing processes
    Our foil technology research group developed innovations that enhance the capability and performance of our strain gages, while simultaneously reducing their size and power consumption as part of our advanced sensors product line. We believe this unique foil technology will create new markets as customers “design in” these next generation products in existing and new applications. Our development engineering team is also responsible for creating new processes to further automate manufacturing, and improve productivity and quality. Our advanced sensors manufacturing technology also offers us the capability to produce high-quality foil strain gages in a highly automated environment, which we believe results in reduced manufacturing and lead times, improved quality and increased margins. As a sign of our commitment to these businesses, we signed a long-term lease for a state of the art facility which has been constructed in Israel. Our administrative personnel have moved to the new facility, and we have begun the transition of our advanced sensors business to that facility and we expect to complete the transition to the new facility in the third quarter of 2021.
    Our design, research, and product development teams, in partnership with our marketing teams, drive our efforts to bring innovations to market. We intend to leverage our insights into customer demand to continually develop and roll out new, innovative products within our existing lines and to modify our existing core products in ways that make them more appealing, addressing changing customer needs and industry trends in terms of form, fit, and function.
    We also seek to achieve significant production cost savings through the transfer, expansion, and construction of manufacturing operations in countries such as India, China, and Israel, where we can benefit from lower labor costs, improved efficiencies, or available tax and other government-sponsored incentives. For example in 2019, we incurred restructuring expense related to closing and downsizing of facilities as part of the manufacturing transitions of our force sensor products to facilities in India and China, which marked key milestones in our ongoing strategic initiatives to align and consolidate our manufacturing footprint.
    Acquisition Strategy
    We expect to continue to make strategic acquisitions where opportunities present themselves to grow our segments. Historically, our growth and acquisition strategy has been largely focused on vertical product integration, using our foil strain gages in our force sensor products, and incorporating those products into our weighing and control systems. The acquisitions of Stress-Tek and KELK, each of which employs our foil strain gages to manufacture load cells for its systems, continued this strategy. Additionally, the KELK acquisition resulted in the acquisition of certain optical sensor technology. The Pacific Instruments acquisition significantly broadened our existing data acquisition offerings and opened new markets for us. The acquisition of DSI expanded our position in the steel market. On June 1, 2021, we completed the acquisition of California-based Diversified Technical Systems, Inc., a manufacturer of data acquisition systems and sensors for product safety and testing, DTS is an established niched-market leader with a strong brand in automotive, avionics, military and defense markets. DTS adds complementary technology to our platform and brings unique engineering capabilities, centered on miniaturized data acquisition and systems integration with sensor technology for critical testing applications. We expect to expand our expertise, and our acquisition focus, outside our traditional vertical approach to other precision sensor solutions in the fields of
    -30-


    measurement of force, weight, pressure, torque, tilt, motion, and acceleration. We believe acquired businesses will benefit from improvements we implement to reduce redundant functions and from our current global manufacturing and distribution footprint.
    Research and Development
    Research and development will continue to play a key role in our efforts to introduce innovative products to generate new sales and to improve profitability. We expect to continue to expand our position as a leading supplier of precision foil technology products. We believe our R&D efforts should provide us with a variety of opportunities to leverage technology, products, and our manufacturing base in order to ultimately improve our financial performance.
    Cost Management
    To be successful, we believe we must seek new strategies for controlling operating costs. Through automation in our plants, we believe we can optimize our capital and labor resources in production, inventory management, quality control, and warehousing. We are in the process of moving some manufacturing to more cost effective locations. This may enable us to become more efficient and cost competitive, and also maintain tighter controls of the operation.
    Production transfers, facility consolidations, and other long-term cost-cutting measures require us to initially incur significant severance and other exit costs. We are realizing the benefits of our restructuring through lower labor costs and other operating expenses, and expect to continue reaping these benefits in future periods. However, these programs to improve our profitability also involve certain risks which could materially impact our future operating results, as further detailed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 11, 2021.
    We are evaluating plans to further reduce our costs by consolidating additional manufacturing operations. These plans may require us to incur restructuring and severance costs in future periods. While streamlining and reducing fixed overhead, we are exercising caution so that we will not negatively impact our customer service or our ability to further develop products and processes.
    Goodwill
    We test the goodwill in each of our reporting units for impairment at least annually, and whenever events or changes in circumstances occur indicating that a possible impairment may have been incurred. Determining whether to test goodwill for impairment, and the application of goodwill impairment tests, require significant management judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Changes in these estimates could materially affect the determination of fair value for each reporting unit. A slowdown or deferral of orders for a business, with which we have goodwill associated, could impact our valuation of that goodwill.
    Foreign Currency
    We are exposed to foreign currency exchange rate risks, particularly due to transactions in currencies other than the functional currencies of certain subsidiaries. U.S. GAAP requires that entities identify the “functional currency” of each of their subsidiaries and measure all elements of the financial statements in that functional currency. A subsidiary’s functional currency is the currency of the primary economic environment in which it operates. In cases where a subsidiary is relatively self-contained within a particular country, the local currency is generally deemed to be the functional currency. However, a foreign subsidiary that is a direct and integral component or extension of the parent company’s operations generally would have the parent company’s currency as its functional currency. We have subsidiaries that fall into each of these categories.
    Foreign Subsidiaries which use the Local Currency as the Functional Currency
    Our operations in Europe, Canada, and certain locations in Asia primarily generate and expend cash using local currencies, and accordingly, these subsidiaries utilize the local currency as their functional currency. For those subsidiaries where the local currency is the functional currency, assets and liabilities in the consolidated condensed balance sheets have been translated at the rate of exchange as of the balance sheet date. Translation adjustments do not impact the results of operations and are reported as a separate component of equity.
    For those subsidiaries where the local currency is the functional currency, revenues and expenses are translated at the average exchange rate for the period. While the translation of revenues and expenses into U.S. dollars does not directly impact the consolidated condensed statement of operations, the translation effectively increases or decreases the U.S. dollar equivalent of revenues generated and expenses incurred in those foreign currencies.
    -31-


    Foreign Subsidiaries which use the U.S. Dollar as the Functional Currency
    Our operations in Israel and certain locations in Asia primarily generate cash in U.S. dollars, and accordingly, these subsidiaries utilize the U.S. dollar as their functional currency. For those foreign subsidiaries where the U.S. dollar is the functional currency, all foreign currency financial statement amounts are remeasured into U.S. dollars. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in the results of operations. While these subsidiaries transact most business in U.S. dollars, they may have significant costs, particularly related to payroll, which are incurred in the local currency and significant lease assets and liabilities.
    Effects of Foreign Exchange Rate on Operations
    For the fiscal quarter ended July 3, 2021, exchange rates increased net revenues by $2.8 million, and increased costs of products sold and selling, general, and administrative expenses by $3.5 million, when compared to the comparable prior year period.
    For the six fiscal months ended July 3, 2021, exchange rates increased net revenues by $4.9 million, and increased costs of products sold and selling, general, and administrative expenses by $5.8 million, when compared to the comparable prior year period.
    Off-Balance Sheet Arrangements
    As of July 3, 2021 and December 31, 2020, we did not have any off-balance sheet arrangements.

    -32-


    Results of Operations
    Statement of operations’ captions as a percentage of net revenues and the effective tax rates were as follows:
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Costs of products sold60.4 %60.9 %60.0 %62.0 %
    Gross profit39.6 %39.1 %40.0 %38.0 %
    Selling, general, and administrative expenses29.8 %31.5 %30.6 %30.7 %
    Operating income6.5 %6.7 %7.8 %6.8 %
    Income before taxes5.7 %4.1 %7.6 %5.8 %
    Net earnings5.4 %3.0 %6.2 %4.0 %
    Net earnings attributable to VPG stockholders5.2 %3.0 %6.1 %4.0 %
    Effective tax rate6.1 %28.1 %18.4 %30.9 %
    Net Revenues
    Net revenues were as follows (dollars in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Net revenues$75,339 $59,146 $145,928 $126,842 
    Change versus comparable prior year period$16,193 $19,086 
    Percentage change versus prior year period27.4 %15.0 %
    Changes in net revenues were attributable to the following:
    vs. prior year
    quarter
    vs. prior year-
    to-date
    Change attributable to:
    Change in volume16.8 %8.5 %
    Change in average selling prices(0.1)%(0.1)%
    Foreign currency effects5.6 %4.2 %
    Acquisitions5.1 %2.4 %
    Net change27.4 %15.0 %
    During the fiscal quarter ended July 3, 2021, net revenues increased 27.4% as compared to the comparable prior year period, with increased volume primarily from the Force Sensors reporting segment and the Weighing and Control Systems segment. The increase in the Weighing and Control Systems reporting segment was aided by the addition of revenues from the acquisition of DTS.
    -33-


    During six fiscal months ended July 3, 2021, net revenues increased 15.0%, as compared to the comparable prior year period, mainly due to increased volume in the Foil Technology and Force Sensors reporting segment, and the addition of revenues from the acquisition of DTS on June 1, 2021.
    Gross Profit Margin
    Gross profit as a percentage of net revenues was as follows:
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Gross profit margin39.6 %39.1 %40.0 %38.0 %
    The gross profit margin for the fiscal quarter ended July 3, 2021 increased 0.5% as compared to the comparable prior year period with higher gross profit margins in the Force Sensors reporting segment being offset by lower margin in the Foil Technology and Weighing and Controls Systems reporting segments.
    The gross profit margin for the six fiscal months ended July 3, 2021 increased 2% as compared to the comparable prior year period, mainly from higher gross profit margins in the Force Sensors reporting segment.
    Segments
    Analysis of revenues and gross profit margins for each of our reportable segments is provided below.
    Foil Technology Products
    Net revenues of the Foil Technology Products segment were as follows (dollars in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Net revenues$33,308 $31,785 $66,019 $62,262 
    Change versus comparable prior year period$1,523 $3,757 
    Percentage change versus prior year period4.8 %6.0 %
    Changes in Foil Technology Products segment net revenues were attributable to the following:
    vs. prior year
    quarter
    vs. prior year-
    to-date
    Change attributable to:
    Change in volume1.8 %3.3 %
    Change in average selling prices0.6 %0.5 %
    Foreign currency effects2.4 %2.2 %
    Net change4.8 %6.0 %
    Net revenues increased 4.8% for the fiscal quarter ended July 3, 2021, as compared to the comparable prior year period. The year-over-year increase in revenue was primarily attributable to an increase in our advanced sensors product line, primarily in our general industrial market and an increase in our Pacific Instrument product line in the Avionics, Military and Space market.
    Net revenues increased 6.0% for the six fiscal months ended July 3, 2021, as compared to the comparable prior year period. Increases in net revenues are primarily attributable to our advanced sensors product line in other markets, test and measurement markets, and general industrial markets.
    Gross profit as a percentage of net revenues for the Foil Technology Products segment was as follows:
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Gross profit margin38.9 %41.8 %39.4 %39.3 %
    The gross profit margin decreased 2.9% for the fiscal quarter ended July 3, 2021, when compared to the comparable prior year period. Impacts from charges related to start-up costs in our new advanced sensors facility and the impact of COVID-19 were partially offset by higher volume and favorable product mix.
    -34-


    The gross profit margin increased 0.1% for the six fiscal months ended July 3, 2021 as compared to the comparable prior year period. Impacts from charges related to start-up costs in our new advanced sensors facility and the impact COVIID-19 completely offset the higher volume and favorable product mix.
    Force Sensors
    Net revenues of the Force Sensors segment were as follows (dollars in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Net revenues$17,216 $8,916 $34,149 $23,611 
    Change versus comparable prior year period$8,300 $10,538 
    Percentage change versus prior year period93.1 %44.6 %
    Changes in Force Sensors segment net revenues were attributable to the following:
    vs. prior year
    quarter
    vs. prior year-
    to-date
    Change attributable to:
    Change in volume88.5 %41.9 %
    Change in average selling prices(1.7)%(1.5)%
    Foreign currency effects6.3 %4.2 %
    Net change93.1 %44.6 %
    Net revenues increased 93.1% for the fiscal quarter ended July 3, 2021, and 44.6% for the six fiscal months ended July 3, 2021 as compared to the comparable prior year periods. The year-over-year increase primarily reflected operational limitations in the second fiscal quarter of 2020 from the COVID pandemic at our facility in India.
    Gross profit as a percentage of net revenues for the Force Sensors segment was as follows:
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Gross profit margin34.7 %11.6 %35.2 %19.5 %
    The gross profit margin for the fiscal quarter ended July 3, 2021 increased 23.1% as compared to the comparable prior year period primarily due to higher revenue and an increase in inventory.
    The gross profit margin for the six fiscal months ended July 3, 2021 increased 15.7% as compared to the prior year period primarily due to higher revenue and an increase in inventory.
    Weighing and Control Systems
    Net revenues of the Weighing and Control Systems segment were as follows (dollars in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Net revenues$24,815 $18,445 $45,760 $40,969 
    Change versus comparable prior year period$6,370 $4,791 
    Percentage change versus prior year period34.5 %11.7 %
    -35-


    Changes in Weighing and Control Systems segment net revenues were attributable to the following:
    vs. prior year
    quarter
    vs. prior year-
    to-date
    Change attributable to:
    Change in volume7.9 %(1.8)%
    Change in average selling prices0.6 %0.3 %
    Foreign currency effects9.7 %6.6 %
    Acquisitions16.3 %6.6 %
    Net change34.5 %11.7 %
    Net revenues increased 34.5% for the fiscal quarter ended July 3, 2021 as compared to the comparable prior year period. The year-over-year increase in revenue was primarily attributable to the addition of revenue for DTS, higher revenue of our onboard weighing products for the transportation market, higher revenue of our process weighing solutions for the industrial market, and higher revenue of our Dynamic Systems, Inc. ("DSI") products for the steel market, which was partially offset by lower revenue of KELK steel-related products.
    Net revenues increased 11.7% for the six fiscal months ended July 3, 2021 as compared to the comparable prior year period primarily due to the addition of revenue for DTS and favorable foreign currency effects.
    Gross profit as a percentage of net revenues for the Weighing and Control Systems segment were as follows:
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Gross profit margin43.9 %47.6 %44.6 %46.6 %
    The gross profit margin for the fiscal quarter ended July 3, 2021 of 43.9% decreased from the second quarter of 2020 due to the impacts of charges related to purchase accounting adjustments from the DTS acquisitions and the impact of COVID-19, along with an unfavorable product mix, which were partially offset by the addition of DTS and favorable exchange rates.
    The gross profit margin for the six fiscal months ended July 3, 2021 of 44.6%, decreased from the prior year period due to the impacts of charges related to purchase accounting adjustments from the DTS acquisitions, lower volume and unfavorable product mix, which were partially offset by the addition of DTS and favorable exchange rate impacts.
    Selling, General, and Administrative Expenses
    Selling, general, and administrative (“SG&A”) expenses are summarized as follows (dollars in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021June 27, 2020July 3, 2021June 27, 2020
    Total SG&A expenses$22,453 $18,640 $44,636 $38,931 
    As a percentage of net revenues29.8 %31.5 %30.6 %30.7 %
    SG&A expenses for the fiscal quarter and six fiscal months ended July 3, 2021 increased compared to the comparable prior year periods with additional SG&A expenses related to personnel costs and foreign currency impacts and SG&A expenses from the acquisition of DTS.
    -36-



    Impairment of Goodwill and Indefinite-lived Intangible Assets
    For the fiscal quarter and six fiscal months ended July 3, 2021, as a result of our interim impairment test, we recorded a $1.2 million pre-tax, non-cash impairment charge which reduced the carrying value of our goodwill and indefinite-lived intangible assets. See Note 4 for further discussion.
    Acquisition Costs
    Acquisition costs associated with the acquisition of DTS were as follows (in thousands):
    Fiscal quarter endedSix fiscal months ended
    July 3, 2021July 3, 2021
    Legal fees$341 $341 
    Appraisal fees18 18 
    Other (investment banker and insurance costs)839 839 
    $1,198 $1,198 
    Restructuring Costs
    Restructuring costs reflect the cost reduction programs implemented by the Company. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements for accrual are met. Because these costs are recorded based upon estimates, actual expenditures for the restructuring activities may differ from the initially recorded costs. If the initial estimates are too low or too high, the Company could be required to either record additional expense in future periods or to reverse part of the previously recorded charges.
    The Company recorded $0.0 million and $0.5 million of restructuring costs during the fiscal quarter ended July 3, 2021 and June 27, 2020, respectively, and $0.0 million and $0.6 million of restructuring costs during the six fiscal months ended July 3, 2021 and June 27, 2020, respectively. Restructuring costs were comprised primarily of employee terminations costs, including severance and statutory retirement allowances, and were incurred in connections with various cost reduction programs.
    Other Income (Expense)
    Interest expense for the fiscal quarter ended July 3, 2021 was flat when compared with interest expense in the comparable prior year period. The impact of increased borrowings on the Company's revolving credit facility in conjunction with the acquisition of DTS were offset by more favorable borrowing rates in 2021. Interest expense for the six fiscal months ended July 3, 2021 was lower when compared with the comparable prior year period mainly due to more favorable borrowing rates in 2021.
    -37-


    The following table analyzes the components of the line “Other” on the consolidated condensed statements of operations (in thousands):
    Fiscal quarter ended
    July 3, 2021June 27, 2020Change
    Foreign exchange loss$(174)$(1,185)$1,011 
    Interest income20 109 (89)
    Pension expense(143)(164)21 
    Other(29)(33)4 
    $(326)$(1,273)$947 
    Six fiscal months ended
    July 3, 2021June 27, 2020Change
    Foreign exchange gain (loss)$561 $(285)$846 
    Interest income65 176 (111)
    Pension expense(280)(323)43 
    Other(99)(158)59 
    $247 $(590)$837 
    Foreign currency exchange gains and losses represent the impact of changes in foreign currency exchange rates. For the fiscal quarter ended July 3, 2021, the change in foreign exchange gains and losses during the period, as compared to the prior year period, is largely due to exposure to currency fluctuations with the Canadian dollar, Japanese yen, the Israeli shekel and the British pound.
    For the six fiscal months ended July 3, 2021, the change in foreign exchange gains and losses during the period as compared to the prior year period is largely due to exposure to currency fluctuations with the Canadian dollar, the Israeli shekel, the Japanese yen, the euro and the British pound
    Income Taxes
    VPG calculates the tax provision for interim periods using an estimated annual effective tax rate methodology based on projected full-year pre-tax earnings among the taxing jurisdictions in which we operate with adjustments for discrete items. The effective tax rate for the fiscal quarter ended July 3, 2021 was 6.1% compared to 28.1% for the fiscal quarter ended June 27, 2020 and the effective tax rate for the six fiscal months ended July 3, 2021 was 18.4% compared to 30.9% for the six fiscal months ended June 27, 2020. The tax rate for both periods presented in 2021 is lower than the prior year periods primarily due to the acquisition of DTS, which enabled the Company to reduce its valuation allowance against deferred tax assets, tax rate changes in certain foreign jurisdictions, and changes in the mix of worldwide income.
    The Company and its subsidiaries are subject to income taxes imposed by the U.S., various states, and the foreign jurisdictions in which we operate. Each jurisdiction establishes rules that set forth the years which are subject to examination by its tax authorities. While the Company believes the tax positions taken on its tax returns for each jurisdiction are supportable, they may still be challenged by the jurisdiction's tax authorities. In anticipation of such challenges, the Company has established reserves for tax-related uncertainties. These liabilities are based on the Company’s best estimate of the potential tax exposures in each respective jurisdiction. It may take a number of years for a final tax liability in a jurisdiction to be determined, particularly in the event of an audit. If an uncertain matter is determined favorably, there could be a reduction in the Company’s tax expense. An unfavorable determination could increase tax expense and could require a cash payment, including interest and penalties.

    -38-


    Financial Condition, Liquidity, and Capital Resources
    We believe that our current cash and cash equivalents, credit facilities and projected cash from operations will be sufficient to meet our liquidity needs for at least the next 12 months.
    In March, 2020, we entered into a third amended and restated credit agreement. The terms of our credit agreement provide for the following facilities: (1) secured revolving facility of $75.0 million, with a sublimit of $10.0 million which can be used for letters of credit for the account of the Company or its subsidiaries that are parties to the Credit Agreement, the proceeds of which may be used for working capital and general corporate purposes. The aggregate principal amount of the 2020 Revolving Facility may be increased by a maximum of $25.0 million upon the request of the Company, subject to the terms of the 2020 Credit Agreement. The 2020 Credit Agreement terminates on March 20, 2025.
    Interest payable on amounts borrowed under the 2020 Revolving Facility is based upon, at the Company’s option, (1) the greatest of: the Agent’s prime rate, the Federal Funds rate, or a LIBOR floor (the “Base Rate”), or (2) LIBOR or CDOR plus a specified margin. An interest margin of 0.25% is added to Base Rate loans. Depending upon the Company’s leverage ratio, an interest rate margin ranging from 1.50% to 2.75% per annum is added to the applicable LIBOR or CDOR rate to determine the interest payable on the Libor or CDOR loans. The Company is required to pay a quarterly fee of 0.25% per annum to 0.40% per annum on the unused portion of the 2020 Revolving Facility, which is determined based on the Company’s leverage ratio each quarter. Additional customary fees apply with respect to letters of credit.
    The obligations of the Company under the 2020 Credit Agreement are secured by pledges of stock in certain domestic and foreign subsidiaries, as well as guarantees by substantially all of the Company’s domestic subsidiaries. The obligations of the Company and the guarantors under the 2020 Credit Agreement are secured by substantially all the assets (excluding real estate) of the Company and such guarantors. The 2020 Credit Agreement restricts the Company from paying cash dividends and requires the Company to comply with other customary covenants, representations, and warranties, including the maintenance of specific financial ratios. The financial maintenance covenants include interest coverage ratio and a leverage ratio. We were in compliance with these covenants at July 3, 2021. If the Company is not in compliance with any of these covenant restrictions, the credit facility could be terminated by the lenders, and all amounts outstanding pursuant to the credit facility could become immediately payable.
    Our business has historically generated significant cash flow. For the six fiscal months ended July 3, 2021, cash provided by operating activities was $12.4 million compared to $16.7 million in the comparable prior year period. Our net cash used in investing activities for the six fiscal months ended July 3, 2021 was higher compared to the prior year period mainly due to the acquisition of DTS. Our net cash provided by financing activities for the six fiscal months ended July 3, 2021 was higher compared to prior year mainly due to the borrowings on the 2020 credit facility for the acquisition of DTS.
    Adjusted free cash flow generated during the six fiscal months ended July 3, 2021, was $4.1 million. We refer to the amount of cash provided by operating activities ($12.4 million) in excess of our capital expenditures ($8.3 million) and net of proceeds from the sale of assets ($0.0 million) as “adjusted free cash flow.”
    The following table summarizes the components of net cash at July 3, 2021 and December 31, 2020 (in thousands):
    July 3, 2021December 31, 2020
    Cash and cash equivalents$73,456 $98,438 
    Third-party debt, including current and long-term:
    Revolving debt61,000 41,000 
    Third-party debt held by Japanese subsidiary— 18 
    Deferred financing costs(330)(374)
    Total third-party debt60,670 40,644 
    Net cash$12,786 $57,794 
    Measurements such as “adjusted free cash flow” and “net cash" do not have uniform definitions and are not recognized in accordance with U.S. GAAP. Such measures should not be viewed as alternatives to GAAP measures of performance or liquidity. However, management believes that “adjusted free cash flow” is a meaningful measure of our ability to fund acquisitions, and that an analysis of “net cash” assists investors in understanding aspects of our cash and debt management. These measures, as calculated by us, may not be comparable to similarly titled measures used by other companies.
    Approximately 87% and 90% of our cash and cash equivalents balance at July 3, 2021 and December 31, 2020, respectively, was held by our non-U.S. subsidiaries.
    -39-


    See the following table for the percentage of cash and cash equivalents, by region, at July 3, 2021 and December 31, 2020:
    July 3, 2021December 31, 2020
    Israel18 %26 %
    Asia25 %18 %
    Europe21 %16 %
    United States13 %10 %
    United Kingdom16 %18 %
    Canada7 %12 %
    100 %100 %
    We earn a significant amount of our operating income outside the United States, the majority of which is deemed to be indefinitely reinvested in the foreign jurisdictions. As a result, as discussed above, a significant portion of our cash and short-term investments are held by foreign subsidiaries. The Company will continue to evaluate its cash needs, however we currently do not intend, nor do we foresee a need, to repatriate funds in excess of what is already planned. The Company will evaluate the possibility of repatriating future cash provided such repatriation can be accomplished in a tax efficient manner. In addition, we expect existing domestic cash, short-term investments, and cash flows from operations to continue to be sufficient to fund our domestic operating activities and cash commitments for investing and financing activities, such as debt repayment and capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.
    If we should require more capital in the United States than is generated by our domestic operations, for example, to fund significant discretionary activities, such as business acquisitions, we could elect to repatriate future earnings from foreign jurisdictions or raise capital in the United States through debt or equity issuances. These alternatives could result in higher tax expense, increased interest expense, or dilution of our earnings. We consider the majority of the undistributed earnings of our foreign subsidiaries, as of July 3, 2021, to be indefinitely reinvested.
    Our financial condition as of July 3, 2021 remains strong, with a current ratio (current assets to current liabilities) of 4.2 to 1.0, as compared to a ratio of 4.7 to 1.0 at December 31, 2020.
    Cash paid for property and equipment for the six fiscal months ended July 3, 2021 was $8.3 million compared to $11.0 million in the comparable prior year period.

    -40-


    Safe Harbor Statement
    From time to time, information provided by us, including but not limited to statements in this report, or other statements made by or on our behalf, may contain "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks, uncertainties, and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those anticipated.
    Such statements are based on current expectations only, and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected, estimated, or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions; difficulties or delays in identifying, negotiating and completing acquisitions and integrating acquired companies; the inability to realize anticipated synergies and expansion possibilities; difficulties in new product development; changes in competition and technology in the markets that we serve and the mix of our products required to address these changes; changes in foreign currency exchange rates; political, economic, health (including the COVID-19 pandemic) and military instability in the countries in which we operate; difficulties in implementing our cost reduction strategies, such as underutilization of production facilities, labor unrest or legal challenges to our lay-off or termination plans, operation of redundant facilities due to difficulties in transferring production to achieve efficiencies; significant developments from the recent and potential changes in tariffs and trade regulation; our efforts and efforts by governmental authorities to mitigate the COVID-19 pandemic, such as travel bans, shelter-in-place orders and business closures and the related impact on resource allocations, manufacturing and supply chains; the Company’s status as a “critical”, “essential” or “life-sustaining” business in light of COVID-19 business closure laws, orders and guidance being challenged by a governmental body or other applicable authority; the Company’s ability to execute its business continuity, operational and budget plans in light of the COVID-19 pandemic; and other factors affecting our operations, markets, products, services, and prices that are set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.


    -41-


    Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    There have been no material changes in the market risks previously disclosed in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 11, 2021.
    Item 4. CONTROLS AND PROCEDURES
    Disclosure Controls and Procedures
    An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act are: (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms; and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.
    Our management, including our CEO and CFO, believes that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must consider the benefits of controls relative to their costs. Inherent limitations within a control system include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. While the design of any system of controls is to provide reasonable assurance of the effectiveness of disclosure controls, such design is also based in part upon certain assumptions about the likelihood of future events, and such assumptions, while reasonable, may not take into account all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and may not be prevented or detected.
    Changes in Internal Control over Financial Reporting
    During our last fiscal quarter ended July 3, 2021, there was no change in our internal control over financial reporting that materially affected, or is reasonable likely to materially affect, internal control over financial reporting.



    -42-


    PART II - OTHER INFORMATION
    Item 1. LEGAL PROCEEDINGS
    None.
    Item 1A. RISK FACTORS
    In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 11, 2021. There have been no material changes in reported risk factors from the information reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

    Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    None.
    Item 3. DEFAULTS UPON SENIOR SECURITIES
    None.
    Item 4. MINE SAFETY DISCLOSURES
    Not applicable.
    Item 5. OTHER INFORMATION
    Not applicable.

    -43-


    Item 6. EXHIBITS
    10.1
    Stock Purchase Agreement, dated June 1, 2021, by and among Vishay Precision Group, Inc., Diversified Technical Systems, Inc., the sellers identified therein, the guarantors identified therein, and Timothy J. Kippen, not individually but solely in its capacity as the representative of the Sellers and Guarantors (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 1, 2021 and incorporated herein by reference).
    31.1      
    Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – Ziv Shoshani, Chief Executive Officer.
    31.2      
    Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – William M. Clancy, Chief Financial Officer.
    32.1      
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Ziv Shoshani, Chief Executive Officer.
    32.2      
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – William M. Clancy, Chief Financial Officer.
    101      Interactive Data File (Quarterly Report on Form 10-Q, for the quarterly period ended July 3, 2021, furnished in XBRL (eXtensible Business Reporting Language).

    -44-


    SIGNATURES
    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
    VISHAY PRECISION GROUP, INC.
     
    /s/ William M. Clancy
    William M. Clancy
    Executive Vice President and Chief Financial Officer
    (as a duly authorized officer and principal financial and accounting officer)
    Date: August 10, 2021

    -45-
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